In our Winter 2015 edition of Coordinates, we made predictions on the ten events and themes that will shape the communications industry over the next 12 months. Here we give an update on some of these predictions that have experienced interesting new developments in the first quarter of 2016.
Industry Analysis: 2016 Predictions Update for Q1
By Michael Tomasini
Prediction: Pay-TV providers follow Comcast’s lead with their ‘Stream’ product and offer slim content packages over the top
In March, AT&T announced an OTT service called DirecTV Now, to be launched in late 2016. No pricing or content information has been revealed so far, but AT&T’s stated intent is to differentiate themselves from “slim” bundles offered by competitors by offering a large portion of the content currently available on DirecTV. Playstation Vue also expanded nationwide in March, offering a wide slate of channels at the competitive price point of $29.99 per month. Expect to see increased competition from Pay-TV providers as this market continues to develop further into the year.
Prediction: As OTT and TVE services mature, Pay-TV providers begin to crack down on password sharing
There has not been any revelatory news from traditional providers on cracking down on suspicious accounts. Meanwhile, OTT providers continue to tolerate and even appreciate the practice. Netflix CEO Reed Hastings said that he “loves” password sharing during his CES 2016 keynote: “A lot of the time”, he said, “household sharing leads to new customers because kids subscribe on their own as they start to earn income”.
Prediction: Traditional broadcasters continue to resist the urge to embrace third-party OTT TV platforms
It has been widely reported that Apple was close to licensing deals with major broadcast networks, but that they were unable to come to an agreement for offering an internet TV subscription along with the new model of the Apple TV. Agreements with the commercial networks are seen by many as the final hurdle for OTT providers to climb for offering service competitive to incumbent Pay-TV providers. Also, early this year the FCC announced a proposal for new set top box regulations that will likely begin to break up the rigidity of the current Pay-TV format. This proposal was met with staunch resistance from incumbents, who stand to lose the significant portion of their revenue that comes with STB leases.
Prediction: In the mobile sector, Wi-Fi first business models grow in popularity
In early March, Google opened up the doors of its Wi-Fi + Sprint/T-Mobile MVNO called Project Fi to all US customers. The service is competitively priced and introduces a truly flat-rate $10/GB data plan. Unfortunately, the service is only available on Google’s Nexus smartphone line. Time will tell how much visibility the low-cost service will be able to achieve.
Prediction: More partnerships will be formed between sharing economy companies and traditional businesses
Ride-sharing partnerships have dominated headlines in Q1: Lyft announced a $500M partnership with GM to develop self-driving cars, while Uber partnered up with technology firm TransLoc to facilitate synergies for ride-hailing and public transportation. Google is continuing to make a push for ride-sharing, giving it its own tab within their Maps app alongside traditional forms of transportation like walking and driving. Alongside long-time Google partner Uber, different ride sharing companies in the UK, Germany, Spain, India and Brazil will have the ability to offer their services within the app.